Important guidelines laid down regarding procedure for promotion of ITAT Members to avoid arbitrariness. Suggestion made that there should be a mechanism to oversee the quality of orders passed by ITAT Members

Shri. R. P. Tolani & Shri. S.K. Yadav, Judicial Members of the ITAT, filed a claim before the Central Administrative Tribunal (“CAT”) challenging their non-appointment as Vice-Presidents at the time that four other Members (S/Shri. K.L. Karwa, O.K. Narayanan, Bhartvaja Shankar & G.C. Gupta) were appointed Vice Presidents. While several contentions were raised before the CAT (including that the appointment of Vice-President was by way of direct recruitment, rather than promotion, and, therefore, the obligation to reserve posts in favour of the OBC group was violated) the principal contention was that the petitioners were senior to some of the members appointed as Vice-Presidents and have equally good, if not better, Annual Confidential Reports (“ACRs”) in their favour. The CAT rejected the contentions. On a Writ Petition by M/s Tolani & Sunil Yadav to challenge the said decision of the CAT HELD by the High Court dismissing the Petitions:

(i) The Selection Committee did not conduct interviews or meet the candidates at any point in the selection process, nor were orders written by the candidates in their capacity as members of the ITAT placed before the Selection Committee. The only material before the Selection Committee was the Annual Confidential Reports (“ACRs”) of the candidates. It is on this basis that the selection of five candidates was made, as the minutes of the Selection Committee records, on the basis of “available character rolls, knowledge and suitability”;(ii) The Selection Committee, as an administrative body, does not have to give reasons for accepting the five candidates in question, and rejecting the two writ petitioners. Nevertheless, the decision-making process should be fair and reasonable, and ensure that promotions are made on the basis of the statutory criteria, and through a fair consideration of the relative merit of the candidates to the posts in question. The Selection Committee was not bound by the ACRs; however, it adopted some other consideration in the absence of any material. The Selection Committee could have adopted the view that the petitioners were not merited, if it formed this opinion on the basis of other material present before it, as for example, sample judgments of the members, their disposal rates, cases turned on appeal etc. If such a course had been followed, the assessment of the Selection Committee would lie outside the Court’s limited power of judicial review. Yet, since no material was before the Selection Committee which could testify as to those factors, and since none of the candidates were interviewed by the Selection Committee (which did not have any occasion to interact with them), the comparative merit as judged by the ACRs leads to a conclusion contrary to that returned by the Selection Committee;

(iii) However, the Court has to be cautious in ensuring that its inquiry does not translate into a ‘merit review’ of the decision of the Selection Committee. The fact that no mala fides were urged or proved against anyone in this case, or in respect of the process, is an important circumstance. Once that aspect is accepted, the further circumstance that the Chairman (Justice Kapadia, who later became the Chief Justice of India) had vast experience in income tax matters, would have had occasion to consider some of the orders of the candidates was relevant. He was aided by the President of ITAT, who in turn would have provided inputs in respect of the functioning of each contender to the post. If these aspects are kept in mind, it cannot be said that there was any unfairness in the selection process or that the committee’s decision is vitiated by non-application of mind, or that relevant material was withheld from consideration;

(iv) To allay any future apprehensions, it would be necessary for the Central Government, in consultation with all concerned, including the President of ITAT, to evolve some guidelines applicable for future cases. This could be in the form of some minimum information about each candidate who applies for the post of Vice President, Senior Vice President and President, in regard to the last three years or five years’ performance, such as the number of orders written or delivered, each year; the units/appeals disposed of; a certain number of orders, i.e. about five or ten (may be chosen in advance by the Chairman of the Committee) to assess their quality, and personal interaction. The committee might, for its own assistance, in accordance with such guidelines, evolve an appropriate marking mechanism. This would lend objectivity and a greater degree of scrutiny of the quality of candidates and avoid the odium of arbitrary or unfair procedure;(v) Members of tribunals such as the ITAT perform crucial judicial functions, which can have an adverse bearing on individuals, and at times, vast commercial and fiscal ramifications. In these circumstances, the Central Government should seriously consider continuous oversight through the concerned High Courts, given that High Courts exercise appellate (and supervisory writ) jurisdiction over the orders and proceedings of ITAT and its benches. Some reporting mechanism, preferably centralized, to oversee the quality of the orders of ITAT is essential because the President of ITAT’s powers over members of ITAT and Vice President are not appellate, they are administrative. Creation of this mechanism would result in adding a new and possibly crucial dimension to ensure greater scrutiny of ITAT and its orders and also provide a link in the decision making process of selection to senior judicial positions within ITAT.